Self Assessment - loss

mc25

If you completed a self assessment in 2008/2009 and there was a loss on box 76. The loss not used/included either on box 78 or 79(2008/2009). This year there is a profit made, but the profit is less than loss from last year. What could be the best approach in doing this. To make it understandable.,, 2008/2009 loss made of 1800 this year 2009/2010 profit made of 1400. Where can I include the loss from 2008/2009 of £1800 in this year self assessment?

Thanks

T.C.

If the profit is less than the personal allowance, then it is not worth using the loss against it. If there is a profit after the personal allowance then you can bring the loss forward from the previous year (take your figures from the previous return) and use this in the current year. Make sense?

Bluewednesday

Presuming these are self assessment trading losses then carried forward losses must be used against the first profits of trade and cannot be waived to preserve personal allowances.

T.C.

Yes Bluewednesday, you are correct. You will have to use up the loss in the first available year against the net profit and any surplus can be carried forward again. So £1400 used against this year and then £400 carried forward. Sorry about that, it was early!!

qwerty

Have any capital allowances been claimed in either year? If so, you could look at waiving the claim to reduce the loss or increase the profit which may help to save wasting the losses, capital allowances and personal allowances.

If not, then the loss may just be wasted.

mc25

thanks

Thanks all for your reply, just to add to this if the person is employed with a 40% threshold can I use the loss to offset against his employment income. Otherwise will have to be treated as T.C said which was what i thought, but the only reason I doubted myself was when I did the self assessment in 08/09, the loss was only included on box 76, and did not carried it as loss c/forward on box 78 or 79.

I hope this makes sense.
Thanks

qwerty

If the person is a 40% tax payer, the loss can be offset against employment income thereby gaining a tax repayment at 40%.

However, you would need to amend the 2008/09 Tax Return to either offset the loss against other income in 2008/09 (box 77) or carry it back and offset against 2007/08 income (box 78).

Also, if you do offset the loss against other income (non-trading) for income tax purposes, remember you still carry the loss forward to offset against future profits for class 4 NIC purposes.

mc25

thanks

qwerty, Thanks alot for your reply.